跨国财务管理11章

1Itcanbewell-knownthateconomicintegrationsweepsallovertheworld,corporateinternationalizationistheforegoneconclusionofeconomicintegration.Howcanyougetajobinthepreviouscorporations?2CourseMaterialsEunandResnick,2010,InternationalFinancialManagement,ChinaMachinePress,5thEdition(4rdEditionOK)ResourcesandReadingsinInternationalFinance:InternationalFinanceResources:

YahooFinance

ReadingsinInternationalFinance:

TheEconomist3CourseObjectiveItisanewfieldofmoderntimescorporationfinancialmanagement.Toprovideaframeworkformakingcorporatefinancialdecisionsinaninternationalcontext.4GlobalizationForeignInvestmentDecisionsInternationalCapitalBudgetingSourcingCapitalinGlobalMarketsMultinationalCashManagementSynthesisCourseOverview5RequirementsandGradingClassparticipationandCases(20%)FinalExam(80%)6Chapter1Globalization&the

MultinationalFirmChapterobjectives:Understandwhyitisimportanttostudyinternationalfinance.Distinguishinternationalfinancefromdomesticfinance.7What’smultinationalfinance？

What’sSpecialaboutmultinationalFinance?Whydoweneedtostudyfinancialmanagementofmultinationalfirm?GoalsforInternationalFinancialManagementGlobalizationoftheWorldEconomyMultinationalCorporationsOutline8KeywordsForeignexchangeriskPoliticalriskMarketimperfectionExpandedopportunitysetMultinationalcorporation(MNC)外汇风险政治风险市场不完善跨国公司扩大的市场机遇91.What’smultinationalfinance？

Financialmanagementismainlyconcernedwithhowtooptimallymakevariouscorporatefinancialdecisions,suchasthosepertainingtoinvestment,financing,dividendpolicy,andworkingcapitalmanagement,withaviewtoachievingasetofgivencorporateobjectives.Multinationalfinanceisconcernedwithfinancialmanagementinaninternationalsetting.102.What’sSpecialabout

multinationalFinance?2.1ForeignExchangeRiskTheriskthatforeigncurrencyprofitsmayevaporateindollartermsduetounanticipatedunfavorableexchangeratemovements.Suppose$1=¥100andyoubuy10sharesofToyotaat¥1,000pershare.Oneyearlatertheinvestmentisworthtenpercentmoreinyen:¥11,000But,iftheyenhasdepreciatedto$1=¥120,yourinvestmenthasactuallylostmoneyindollarterms.112.2PoliticalRiskPoliticalriskrangesfromunexpectedchangesintaxrulestooutrightexpropriationofassetsheldbyforeigners.Sovereigngovernmentshavetherighttoregulatethemovementofgoods,capital,andpeopleacrosstheirborders.Theselawssometimeschangeinunexpectedways.What’sSpecialabout

multinationalFinance?12What’sSpecialabout

InternationalFinance?2.3MarketImperfections

Legalrestrictionsonmovementofgoods,people,andmoneyTransactionscostsShippingcostsDiscriminationtaxationMarketImperfectionsrepresentvariousfrictionandimpedimentspreventingmarketsfromfunctioningperfectly.TheExampleofNestlé’sMarketImperfectionNestléusedtoissuetwodifferentclassesofcommonstockbearersharesandregisteredshares.Foreignerswereonlyallowedtobuybearershares.Swisscitizenscouldbuyregisteredshares.Thebearerstockwasmoreexpensive.OnNovember18,1988,Nestléliftedrestrictionsimposedonforeigners,allowingthemtoholdregisteredsharesaswellasbearershares.Nestlé’sForeignOwnershipRestrictions12,00010,0008,0006,0004,0002,000011203191824Source:FinancialTimes,November26,1988p.1.Adaptedwithpermission.SFBearershareRegisteredshareTheExampleofNestlé’sMarketImperfectionFollowingthis,thepricespreadbetweenthetwotypesofsharesnarroweddramatically.ThisimpliesthattherewasamajortransferofwealthfromforeignshareholderstoSwissshareholders.ForeignersholdingNestlébearershareswereexposedtopoliticalriskinacountrythatiswidelyviewedasahavenfromsuchrisk.TheNestléepisodeillustratesboththeimportanceofconsideringmarketimperfectionsandtheperilofpoliticalrisk.162.4ExpandedOpportunitySet

Whenfirmsorindividualinvestorsventureintothearenaofglobalmarkets,theycanbenefitfromanexpandedopportunityset.Firmscanlocateproductioninanycountryorregionoftheworldtomaximizetheirperformanceandraisefundsinanycapitalmarketwherethecostofcapitalisthelowest.Inaddition,firmscangainfromgreatereconomiesofscalewhentheirtangibleandintangibleassetsaredeployedonaglobalbasis.What’sSpecialabout

multinationalFinance?173.Whydoweneedtostudyfinancialmanagementofmultinationalfirm?Highly

globalizedand

integrated

worldeconomy.ConsumptionProductionInvestmentItisthusessentialforfinancialmanagerstofullyunderstandvitalinternationaldimensionsoffinancialmanagement.18AmericanconsumersimportoilSaudiArabiaTVsetsJapanautomobilesGermanygarmentsChinashoesIndonesiapastaItalywineFranceexportaircraft,software,movies,jeans,wheat,andotherproducts19ProductionNike,aU.S.-basedcompanywithagloballyrecognizedbrandname,manufacturesathleticshoesinsuchAsiandevelopingcountriesasChina,Indonesia,andVietnamusingsubcontractors,andsellstheproductsintheU.S.andforeignmarkets.ThecompanyhasnoproductionfacilitiesintheUnitedStates.Inaword,MNCsrelentlesseffortstosourceinputsandlocateproductionanywhereintheworldwherecostsarelowerandprofitsarehigher.20ProductionForexample,personalcomputerssoldintheworldmarketmighthavebeenassembledinMalaysiawithChinese-mademonitors,Korean-madekeyboards,U.S.-madechipsandpreinstalledsoftwarepackagesthatwerejointlydevelopedbyU.S.andIndianengineers.21InvestmentRecently,financialmarketshavealsobecomehighlyintegrated.Thisdevelopmentallowsinvestorstodiversifytheirinvestmentportfoliosinternationally.Let’sconsidercross-listing.Manymajorcorporationsoftheworld,suchasIBM,Sony,havetheirsharescross-listedonforeignstockexchanges,therebyrenderingtheirsharesinternationallytradableandgainingaccesstoforeigncapitalaswell.Forexample,Daimler-Benz,sventureinChinacanbefinancedpartlybyAmericaninvestorswhopurchaseDaimler-Benz’ssharestradedontheNewYorkStockExchange.22KeywordsCorporategovernanceTheGeneralAgreementonTariffsandTrade(GATT)TheWorldTradeOrganization(WTO)TheEuropeanUnion(EU)TheNorthAmericanFreeTradeAgreement(NAFTA)欧盟关贸总协定公司治理世界贸易组织北美自由贸易协定Thefocusofthetextistoequipthereaderwiththe“intellectualtoolbox”ofaneffectiveglobalmanager—butwhatgoalshouldthiseffectiveglobalmanagerbeworkingtoward?Maximizationofshareholderwealth?orOtherGoals?4.GoalsforInternationalFinancialManagement4.1MaximizeShareholderWealthLongacceptedasagoalintheAnglo-Saxoncountries,andtheultimategoalofinternationalfinancialmanagement.4.2OtherGoalsInothercountriesshareholdersareviewedasmerelyoneamongmany“stakeholders”ofthefirmincluding:EmployeesSuppliersCustomersTheytendtoconsiderthepromotionofthefirm’sstakeholders’overallwelfareasthemostimportantcorporategoal.265.GlobalizationoftheWorldEconomyEmergenceofglobalizedfinancialmarketsEmergenceoftheeuroasaglobalcurrencyTradeliberalizationandeconomicintegration

PrivatizationDeregulationofFinancialMarketscoupledwithAdvancesinTechnologyhavegreatlyreducedinformationandtransactionscosts,whichhasledto:FinancialInnovations,suchasCurrencyfuturesandoptionsCross-borderstocklistingsInternationalmutualfunds5.1EmergenceofGlobalized

FinancialMarkets5.2EmergenceoftheEuroasaGlobalCurrencyAmomentouseventinthehistoryofworldfinancialsystems.Currentlymorethan300millionEuropeansin28countriesareusingthecommoncurrencyonadailybasis.1欧元=8.5629人民币元1欧元=1.3797美元5.3TradeLiberalizationandEconomicIntegrationOverthepast50years,internationaltradeincreasednearlythreetimesasfastasworldGDP.Eventheonce-protectionistandinward-lookingcountriesarenowincreasinglypursuingfree-marketandopen-economypoliciesbecauseofthegainsfrominternationaltrade.5.3TradeLiberalizationandEconomicIntegrationTheGeneralAgreementonTariffsandTrade(GATT)amultilateralagreementamongmembercountrieshasreducedmanybarrierstotrade.TheWorldTradeOrganizationhasthepowertoenforcetherulesofinternationaltrade.EU&NAFTAOnregionallevel,formalarrangementamongcountrieshavebeeninstitutedtopromoteeconomicintegration.TheEU(EuropeanUnion)includes28memberstatesthathaveeliminatedbarrierstothefreeflowofgoods,capital,andpeople.TheNorthAmericanFreeTradeAgreement(NAFTA)callsforphasingoutimpedimentstotradebetweenCanada,MexicoandtheUnitedStatesovera15-yearperiod.

5.4Privatization

Thesellingoffstate-runenterprisestoinvestorsisalsoknownas“Denationalization”.Oftenseeninsocialisteconomiesintransitiontomarketeconomies.Bymostestimatesthisincreasestheefficiencyoftheenterprise.Oftenspursatremendousincreaseincross-borderinvestment.336.MultinationalCorporations

Thereareabout60,000MNCsintheworldwithover500,000foreignaffiliates.Amultinationalcorporation(MNC)canbedefinedasabusinessfirmincorporatedinonecountrythathasproductionandsalesoperationsinseveralothercountries.34MultinationalCorporations

ManyMNCsobtainrawmaterialsfromonenationalmarket,financialcapitalfromanother,producegoodswithlaborandcapitalequipmentinathirdcountryandselltheiroutputinvariousothernationalmarkets.WhichfamousMNCsdoyouknow?35Top10MNCsin2002(billionofdollars)36ThewaysinwhichMNCsgainEconomyofscaleSpreadingR&Dexpendituresandadvertisingcostsovertheirglobalsales;Poolingglobalpurchasingpoweroversuppliers;Utilizingtheirtechnologicalandmanagerialknow-howgloballywithminimumadditioncosts,andsoforth.37ThewaysinwhichMNCsgainGlobaloperationMNCscanusetheirglobalpresencetotakeadvantageofunderpricedlaborservicesavailableincertaindevelopingcountries,andgainaccesstospecialR&Dcapabilitiesresidinginadvancedcountries.38Questions1.Howisinternationalfinancialmanagementdifferentfromdomesticfinancialmanagement?

?39Questions2.Whataremultinationalcorporations(MNCs)?

What’sSpecialabout“International”Finance?

1.Whatmajordimensionsetsapartinternationalfinancefromdomesticfinance?a)foreignexchangeandpoliticalrisksb)Marketimperfectionsc)Expandedopportunitysetd)alloftheaboveAnswer:d402.Anexampleofapoliticalriskisa)Expropriationofassetsb)Adversechangeintaxrulesc)Theoppositionpartybeingelectedd)a)andb)arebothcorrectAnswer:d

413.Productionofgoodsandserviceshasbecomeglobalizedtoalargeextentasaresultofa)Skilledlaborbeinghighlymobileb)Naturalresourcesbeingdepletedinonecountryafteranotherc)Multinationalcorporations’effortstosourceinputsandlocateproductionanywherewherecostsarelowerandprofitshigherd)CommontastesworldwideforthesamegoodsandservicesAnswer:c424.Supposeyourfirminvests$100,000inaprojectinItaly.Atthetimetheexchangerateis$1.25=€1.00.Oneyearlatertheexchangerateisthesame,buttheItaliangovernmenthasexpropriatedyourfirm’sassetspayingonly€80,000incompensation.Thisisanexampleofa)Exchangerateriskb)Politicalriskc)Marketimperfectionsd)Noneoftheabove,since$100,000=€80,000×$1.25/€1.00Answer:b)435.Mostgovernmentsatleasttrytomakeitdifficultforpeopletocrosstheirbordersillegally.Thisbarriertothefreemovementoflaborisanexampleofa)Informationasymmetryb)Excessivetransactionscostsc)Racialdiscriminationd)AmarketimperfectionAnswer:d)446.Whenindividualinvestorsbecomeawareofoverseasinvestmentopportunitiesandarewillingtodiversifytheirportfoliosinternationally,a)theytradeonemarketimperfection,informationasymmetry,foranother,exchangeraterisk.b)theybenefitfromanexpandedopportunityset.c)Theyshouldnotbothertoreadortounderstandtheprospectus,sinceitsprobablywritteninaforeignlanguaged)Theyshouldinvestonlyindollarsoreuros.Answer:b

457.Nestlé,awell-knownSwisscorporation,a)Hasbeenaparagonofvirtueinitsoppositiontoallformsofpoliticalrisk.b)Atonetimeplacedrestrictionsonforeignownershipofitsstock.Whenitrelaxedtheserestrictions,thetotalmarketvalueofthefirmfell.c)Atonetimeplacedrestrictionsonforeignownershipofitsstock.Whenitrelaxedtheserestrictions,therewasamajortransferofwealthfromforeignshareholderstoSwissshareholders.d)NoneoftheaboveAnswer:c)468.Thegoalofshareholderwealthmaximizationa)isnotappropriatefornon-U.S.businessfirmsb)meansthatallbusinessdecisionsandinvestmentsthatafirmmakesaredoneforthepurposeofmakingtheownersofthefirmbetterofffinanciallyc)isasub-objectivethefirmshouldattempttoachieveaftertheobjectiveofcustomersatisfactionismetd)isinconflictwiththeprivatizationprocesstakingplaceinthird-worldcountriesAnswer:b479.RecentcorporatescandalsatfirmssuchasEnron,WorldComandtheItalianfirmParmalata)Showthatmanagersmightbetemptedtopursuetheirownprivateinterestsattheexpenseofshareholders.b)ShowthatItalianshareholdersarebetteratmonitoringmanagerialbehaviorthanU.S.shareholders.c)Showthatwhite-collarcriminalshardlyevergetpunished.d)Showthatsocialismisabetterwaytogothancapitalism.Answera)

4810.WhilethecorporategovernanceproblemisnotconfinedtotheUnitedStates,a)Itcanbeamuchmoreseriousprobleminmanyotherpartsoftheworld,wherelegalprotectionofshareholdersisweakornonexistent.b)IthasreacheditshighpointintheUnitedStates.c)TheU.S.legalsystem,withlawsuitsusedonlyasalastresort,ensuredthatanyconflictsofinterestwillsoonbeathingofthepast.d)NoneoftheaboveAnswer:a)4911.Theownersofabusinessarethea)Taxpayersb)Workersc)Suppliersd)ShareholdersAnswer:d)5012.Themassiveprivatizationthatiscurrentlytakingplaceinformerlysocialistcountries,willlikelya)eventuallyenhancethestandardoflivingtothesecountries’citizensb)dependonprivateinvestmentc)increasetheopportunitysetfacingthesecountries’citizensd)alloftheaboveAnswer:d)5113.Whencorporategovernancebreaksdowna)Shareholdersareunlikelytoreceivefairreturnsontheirinvestmentsb)Managersmaybetemptedtoenrichthemselvesatshareholderexpensec)Theboardofdirectorsisnotdoingitsjobd)AlloftheaboveAnswer:d)5214.AMNCmaygainfromitsglobalpresencebya)SpreadingR&Dexpendituresandadvertisingcostsovertheirglobalsalesb)Poolingglobalpurchasingpoweroversuppliersc)Utilizingtheirtechnologicalandmanagerialknow-howgloballywithminimumadditionalcostsd)Alloftheabovearepotentialgains.Answer:d)5315.AMNCcana)Beafactorthatincreasestheopportunitiesofthecitizensoflessdevelopedcountriesb)Beafactorthatincrease